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"As government borrowing in the world increases, interest rates will go up.
As tax revenues fall and the deficit increases, interest rates will rise, and the higher cost of borrowing will impede business investment and hiring.
That problem will only be compounded when the European Central Bank increases interest rates, as it has warned it will do.
All emerging-market debt instruments are less attractive because the Fed increases interest rates, leading to further capital inflows to America and out of other markets–so the dollar appreciates and the vicious cycle spins again.
The choice is essentially zero sum: When the Fed increases interest rates to limit inflation, it does so by deliberately reducing economic demand, which reduces potential job growth. .
Similar(53)
Australia increased interest rates from 5% to 5 1/2%.
When was the last time they increased interest rates?
There are three reasons for not increasing interest rates.
[C9.] Stocks Rally After Rate Increase Stocks rallied after the Fed increased interest rates.
It is not clear, however, that the Fed could significantly increase interest rates.
Greenspan explained why the Fed had felt compelled to increase interest rates.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com